1. What the Form Is
The CG 24 14 Waiver Of Governmental Immunity endorsement is a crucial addition to a Commercial General Liability (CGL) policy for governmental entities. Its primary purpose is to address the legal doctrine of sovereign immunity, which often protects governmental bodies from lawsuits or limits their liability. This endorsement signifies that the insuring company agrees not to use the governmental entity's immunity as a defense against claims covered by the policy, up to the policy limits. Essentially, it allows individuals or other entities who have suffered injury or damage due to the governmental insured's actions (and covered by the CGL policy) to seek recovery that might otherwise be barred. It's important to note that while the insurer agrees to waive this defense, the insured governmental entity typically retains the right to assert immunity, but they must inform the insurer in writing if they choose to do so.
2. Classes of Business It Applies To
This endorsement is specifically designed for governmental entities. This includes a wide array of public bodies, such as:
- State governments and their various departments or agencies.
- County governments (e.g., for claims related to road maintenance or public building safety).
- City and municipal governments (e.g., for claims arising from city-owned utilities or parks).
- Townships and villages.
- Public school districts (e.g., for liability related to school property or activities).
- Special purpose districts (e.g., water districts, park districts, public transit authorities).
- Tribal governments, in certain contexts, as they also possess sovereign immunity.
Real-world example: A city government purchases a CGL policy for its operations. If someone is injured due to a trip and fall on a poorly maintained city sidewalk, the CG 24 14 endorsement would allow the injured party to make a claim against the city's insurance policy, and the insurer would not use the city's governmental immunity as a reason to deny the claim (up to policy limits), unless the city specifically instructs them in writing to assert immunity.
3. Special Considerations
Several important factors come into play when considering the CG 24 14 endorsement:
- Voluntary Waiver: The waiver of immunity through this endorsement is typically a voluntary act on the part of the governmental entity, agreed upon at the inception of the policy or when a claim arises.
- Policy Limits: The waiver only applies up to the limits of the insurance policy. Claims exceeding the policy limits may still be subject to governmental immunity defenses.
- Scope of Coverage: The waiver is only for claims that are otherwise covered by the CGL policy. If a particular type of claim is excluded by the policy language, the waiver of immunity will not create coverage. For example, if a policy excludes claims between law enforcement officers, the waiver wouldn't apply to such a claim.
- Statutory Requirements: Some states have specific statutes that dictate how and to what extent governmental immunity can be waived, often tied to the purchase of liability insurance. It's crucial to understand the interplay between this endorsement and applicable state laws.
- Contractual Agreements: Governmental entities may enter into contracts that require them to waive immunity. This endorsement helps fulfill such contractual obligations. For instance, a government might waive immunity in a construction contract to allow a contractor to sue for breach of contract.
- Insured's Right to Assert Immunity: As mentioned, the governmental insured usually retains the right to instruct the insurer to assert the immunity defense. This decision might be made based on the specifics of a claim or legal strategy.
- Revisions and Availability: The CG 24 14 has been revised over time, and its availability was extended for use with other coverage parts like the Owners and Contractors Protective Liability Coverage Part and the Railroad Protective Liability Coverage Part.
Real-world example: A county enters into a contract with a construction company to build a new community center. The contract requires the county to waive its sovereign immunity for disputes arising from the project. By adding the CG 24 14 to its CGL policy, the county provides a mechanism for the construction company to seek recourse through the county's insurance if, for example, the county's negligence during the project leads to property damage for the contractor.
4. Key Information for Agents and Underwriters
Agents and underwriters should consider the following when dealing with the CG 24 14:
- Risk Assessment: The presence of this endorsement means the insurer is taking on exposure that might otherwise be legally barred. Underwriters need to carefully assess the operations and potential liabilities of the governmental entity. This includes understanding the entity's loss history and the types of services it provides.
- Pricing: The waiver of a significant defense like sovereign immunity can increase the insurer's risk. This may be reflected in the premium charged for the CGL policy.
- Coverage Gaps: While the endorsement waives the immunity defense, it doesn't expand the underlying policy coverage. Agents should ensure clients understand that the waiver only applies to covered claims. For example, if the policy has a pollution exclusion, the waiver of immunity won't create coverage for a pollution-related claim.
- Underwriting Guidelines: Insurers will have specific underwriting guidelines for governmental entities, and the decision to offer this endorsement will be based on the overall risk profile. This includes evaluating the entity's risk management practices.
- State-Specific Laws: The extent and impact of governmental immunity vary significantly by state. Underwriters and agents must be knowledgeable about the specific laws in the jurisdictions where the governmental entity operates. Some states may have statutory caps on liability or specific procedures for claims against governmental bodies.
- Clarity of Intent: The endorsement clarifies the insurer's stance on using the immunity defense, providing greater certainty for both the insured governmental entity and potential claimants.
- Impact on Defense: The insurer agrees not to use the immunity defense, which means they will defend claims that might otherwise have been dismissed early based on immunity. This can impact defense costs.
Real-world example for underwriters: When underwriting a CGL policy for a public school district that requests the CG 24 14, the underwriter will consider factors such as the age and condition of school buildings (potential for premises liability claims), the types of extracurricular activities offered (potential for injury claims), and the district's safety protocols and claims history. The underwriter will also consider any state laws that limit the school district's liability, even with the waiver.